How to Exit an Employee Without Risking a Constructive Dismissal Claim

Letting someone go is never easy. It’s one of the hardest responsibilities business owners face, especially when the relationship with an employee just isn’t working anymore.

We often hear from business owners who know, deep down, that a team member needs to move on. But they’re also aware that mishandling the situation could open them up to a constructive dismissal claim – and no one wants that.

If that’s where you are right now, you’re not alone. And there is a way through it.

With the right approach and expert guidance, it is possible to exit an employee fairly, legally, and with dignity for everyone involved.

1. Understand What Constructive Dismissal Looks Like

Constructive dismissal happens when an employee feels forced to resign because of the way they’ve been treated. It’s classed as unfair dismissal under the Employment Rights Act 1996, and if it lands in a tribunal, it can be very costly.

What might lead to a claim?

• Unlawful changes to pay or benefits

• A major change in job role or duties

• Sudden changes to working hours or location

• Discrimination or unfair treatment

• A toxic or hostile workplace

• Ignoring grievances or concerns

• Making the workplace intolerable

If any of this rings alarm bells, it’s time to step back and get some advice.

2. Build a Fair Case Based on Performance or Capability

You can’t just edge someone out because things aren’t going well. There has to be a justifiable reason for letting them go.

That means:

• Setting clear expectations and measurable targets

• Offering support and guidance

• Putting proper performance management in place

• Keeping detailed records of every conversation, meeting, and action taken

Not only does this protect your business, but it also gives the employee a fair chance to turn things around. And sometimes, they do.

3. Explore Alternatives to Dismissal

If performance reviews haven’t helped, or the relationship has broken down, there are other options worth considering:

• A mutual agreement:
  A frank, respectful chat might lead to a mutual decision to part ways.

• A settlement agreement:
  This is a legally binding deal where the employee agrees to leave in exchange for a financial package.

• Redeployment:
  If they’re not suited to one role, could they thrive in another?

Handled well, these routes can save a lot of stress, protect your reputation, and preserve goodwill.

Please, Don’t Go It Alone

Trying to navigate this without expert HR guidance can leave you exposed. A misstep could lead to tribunal, reputational damage, and financial loss.

At Starfish People HR, we’re here to make the process safer, simpler, and more human.

We’ll support you every step of the way with advice that’s tailored to your business, your people, and your values. If you’re feeling stuck, we’re just a call away. Let’s talk it through.

You can call us directly on 01243 – 967961 or email [email protected]